Why You Should Be Interested In Chile’s Mining Industry

Chilean mining: With a wealth of metals and minerals, particularly in the north of the country, Chile has a thriving, 150-year-old mining industry. Significant efforts by the Chilean government to attract foreign investment to the sector have helped grow the industry and attract global leaders in mining business services and equipment to Chile.

Copper is the most heavily produced metal in Chile, and the country produces 34% of the world’s copper. Copper provides some 20% of the Chile’s GDP and 60% of exports.

Chile is home to over 100 million tons of fine copper reserves. Gold (Chile is the world’s second largest producer), and molybdenum (Chile is the world’s fifth largest producer), both by-products of copper extraction, are also significant to Chile’s mining industry. Some 27% of the world’s lithium reserves can also be found in Chile and the country produces more than 50% of the world’s supply.

Chile’s mining industry is expected to grow over the coming years as demand for precious metals increases as emerging economies expand. Despite slowdowns in demand from China, which has been the recipient of 40% of Chile’s copper, the Chilean investment portfolio of mining projects is not expected to decline. This year Chile’s mining industry is expected to bring in over US$80mn worth of investment.

Investment Opportunity – Chilean Mining Laws

Chile’s mining and environmental regulatory framework has evolved significantly over the past two decades. The government has made strong efforts to attract foreign direct investment to the mining sector and as a result there are specific progressive laws relating to foreign investors.

The mining sector is mainly regulated by the mining code, which protects property relating to mines as well as the industry. Mining concessions are granted to mining companies by the Chilean Mining Ministry. Foreign investment into the mining sector is governed by The Foreign Investment Stature and Chapter XIV of the Central Bank’s Compendium of Foreign Exchange Regulations.

Chilean Mining Taxation

Corporations are taxed in two-stages in Chile. First stage income tax (FCIT) of 20% is applied on declared profit, and second stage tax is levied on dividends to individuals or non-resident shareholders. Second stage tax is charged at a rate of 35% with an imputation credit for the FCIT paid when profit distributions are made to non-Chilean resident shareholders.

Withholding tax up to 35% must also be paid on interests, royalties and fees paid to non-Chilean residents. A specific progressive rate income tax on mining activities must also be paid to the government, levied on operational income obtained from mining activities. The tax ranges from 5-34.5%. Mining companies with annual sales equivalent to 12,000-50,000 tons are charged between 0.5-4.5%, and if annual sales exceed 50,000 tons of fine copper a 14% effective rate is levied. Companies that sell less than 12,000 metric tons of fine copper are exempt from this tax.

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Biz Latin Hub can help you obtain a mining permit in Chile

Chile’s abundant mineral resources represent a significant opportunity for mining companies looking to enter Latin America or expand from elsewhere in the region. At Biz Latin Hub, our team of multilingual corporate legal and accounting specialists is equipped to provide the legal services and guidance you need to navigate the country’s regulatory framework and obtain a mining permit in Chile. With our full portfolio of market entry and back-office services, we are your single point of contact to successfully expand into the country.

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